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Uber Stung: Cambridge Tries to Stifle Innovation. Fails.

It was a classic sting operation. City officials arrange for illicit services, have them provided, and deliver the target of the operation to a waiting police officer. But the target wasn't a pimp, a prostitute or a drug dealer. Instead, it was a town car driver. The alleged violation? Use of a non-conforming measuring device, specifically, an iPhone. And this was no fly-by-night service operating clandestinely. It was the darling of the high-tech crowd, Uber, whose entry into the Boston-area market had been widely trumpeted and whose "Boston" headquarters is located a scant 2 blocks from Cambridge City Hall.

Uber's business model is simple. Town cars providing scheduled pickups often have downtime between jobs. People needing rides want something more dependable than calling for a cab, and something they perceive as safer. Uber contracts with car services, provides customers a smartphone app to summon cars, and handles the billing electronically. When you summon a car, Uber will tell you how quickly one can be there and will text you when it arrives. No money changes hands and a receipt - including the GPS track of the route driven - shows up in your inbox. Uber also uses a variable pricing scheme; the busier the time, the more the ride costs. Or, as its founder has said on a number of occassions, he wanted to press a button have a car come for him.

Uber has not been without controversy. It's initial launch in San Francisco, when it called itself "UberCab", caused concern that its service would be confused with taxis, prompting a name change. Last month, in Washington DC, which had earlier run its own sting operation against Uber, the City Council sought to price Uber out of existence by setting fares to be five times those of taxis, an effort the council eventually voted down.

What happened on May 25th in Cambridge is detailed in memo of decision from the State's Division of Standards:

"Mr. Corey Pilz of the Cambridge Consumer Division arranged for a pick-up at 806 Mass Avenue in Cambridge. Mr. Pilz and Sealer Cassidy were passengers and observed Mr. Gelaye, the driver of the vehicle, activate the GPS billing sequence programmed into
the Smartphone issued to him by Uber Technologies, Inc. After traveling a short distance the driver was told to pull over where Cambridge Police Officer Szeto was waiting as pre-arranged. At that time the passengers identified themselves as City of Cambridge officials and the driver was issued citations for operating an unlicensed livery service and for using a measuring device not conforming to standards."

Uber appealed the citation to the Division of Standards which held a July 9th hearing. The facts were not contested but the status of GPS measurement technology was.

Standards for taxi measurement devices are set federally by the National Institute of Standards and Technology (NIST), the same government bureau in the Department of Commerce that maintains the official time. Its 8 page document on taxi meters are straightforward and precise in what a taxi meter should do - accurately and clearly account for time and distance, for example - and should not do - be vulnerable to tampering. Cambridge asserted that under these standards, Uber's use of an iPhone app wasn't approved. Uber asserted that, since these standards didn't actually speak to smartphones, there was no standard and they could not be held to a standard that did not exist. Not surprisingly, the Division of Standards sided with Cambridge, a decision that Uber announced on August 15th, when it received a "cease and desist" letter from the state.

What happened next should not have been a surprise. Uber is a technology company, funded by Silicon Valley venture capitalists and is part of the startup media culture. Coverage in the high tech press was almost instant. Quickly, a social media campaign began, as well. While all that helped, it also didn't hurt that Uber had loyal customers on Governor Deval Patrick's staff, one of whom tweeted that he used the service to get home from Tuesday's Bruce Springteen concert at Fenway Park. And by close of business that same day Undersecretary of the Office of Consumer Affairs and Business Regulation Barbara Anthony released a statement saying that they had become aware that NIST was in the process of evaluating Uber's technology and, because of that, Uber was in compliance and could continue operating adding:

"We apologize for any confusion or inconvenience. Massachusetts is a leader ininnovation and we applaud Uber’s innovative spirit and welcome their competition into the commercial passenger transportation market"

But what of Cambridge?

Elizabeth Lint, Executive Director of the Cambridge License Commission said, via email, that the "Hackney Division stands by its original position in regards to Uber and ensuring public safety" and would have no other comment at this time.

City Councilor Minka vanBeuzekom expressed her surprise that "that Cambridge officials set up a sting operation instead of working with Uber directly" adding that "it's all about options for people". She wants to ensure the survival of the taxi industry and wants to "encourage it to improve."

Meanwhile, on the Cambridge Licensing Commission web site, you can find instructions on how to apply for a Palm Reader's license. There's no indication whether or notthis requires NIST-approved technology.

Comments

I suggest that the best strategy for "survival of the taxi industry" would be complete deregulation except for basic safety of the vehicles and minimum requirements for the drivers. Prices would fall and transportation options would soar.

We don't need a cab cartel.